Disability Vs. Social Security Benefits at Retirement

Disabled workers approaching retirement age face an important Social Security decision.
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If you're working and earning income, you're paying into the Social Security system. Retirement may be a long way off, but your Social Security taxes also pay for disability insurance coverage that starts at age 18. If a medical condition or permanent injury prevents you from working, it's best to apply for benefits as soon as you can.

Retirement Age and Eligibility

Social Security offers both retirement and disability insurance programs. As of 2012, the law required at least 40 work credits to qualify for retirement benefits. You earn a credit by paying Social Security taxes on a minimum amount of income ($1,130 in 2012); you can earn four credits a year. You can take early retirement as young as 62, but this means your monthly benefit will be permanently reduced by up to 25 percent. Full retirement age varies from 65 to 67, depending on the year of your birth.

Disability Eligibility

To draw disability, you also need a minimum number of work credits, which varies depending on your age. The older you are, the more credits you need. If you're younger than 24, you need six work credits in the three years before you became disabled. Between 24 and 30, you need credits for half the time between age 21 and the onset of your disability. From 31 to 40, you need 20 credits, and you need a gradually increasing number of credits until age 62, when the maximum requirement is reched: 40 credits.

The Approval Process

You also must prove to Social Security that you have a medical condition that has lasted (or is expected to last) at least a year, is expected to be terminal and will permanently prevent you from working. If Social Security approves your disability claim, the benefit amount depends on how much you've already earned and paid into Social Security. If you're not eligible for disability, you may be eligible for Supplemental Security Income, another disability benefit program that limits income and assets you can have to be eligible.

Date Last Insured and Applications

If you're unable to work due to a medical condition, apply for Social Security disability as soon as possible. The agency doesn't charge you for an application, but it does require not only accumulated work credits but also a minimum amount of recent work. That means the longer you wait to apply, the closer you get to your "date last insured," the day on which your disability eligibility ends. If you are denied for having insufficient work credits or recent work, there is no appeal.

Return to Work and Retirement

If you're on disability, the benefits continue until you return to work or until Social Security decides your medical condition has improved enough for you to get back on the job. Every three to five years, the agency will review your medical records to make this decision. When you reach your full retirement age, your disability benefits will convert to Social Security retirement at the same monthly amount, and the disability case closes.

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